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408 244 (May 27, 1915) Regulation M Series 1915. F E D E R A L R E S E R V E B O A R D WASHINGTON May 2l'i 1915- ADMITTANCE OF STATE BANKS. I. Statutory Requirements Specific provisions of the Federal Reserve Act applica ble to State banks and trust companies which become member banks are quoted at the end of this regulation. II. Banks Eligible for Membership. A State bank or a trust company which complies with the following conditions is eligible for membership m a Federal re serve bank (1) It must have been incorporated under a special or gen eral law of the State or district in which it is located. (2) It must have a minimum paid-up unimpaired capital stock as follows* In cities or towns of less than 3,000 inhabitants, $25,000, In cities or tbwns of more then 3,000 but less than 6.000 inhabitants, $50,000, In cities or towns of more than 6,000 but less than 60.000 inhabitants, $10b,000, In cities of more than 50,000 inhabitants, $200,000. III. Application for Membership Any State bank or trust company may nuke application on Form attached to and made a part of this regulation, to the Federal reserve agent of its district for an amount of capital stock m the Federal reserve bank of such district equal to six percentum of the paid-up capital stock and surplus of such State bank or trust company. Upon receipt of such application the Federal reserve agent shall submit the some to a committee composed of the Federal reserve agent, the Governor of the Federal reserve bank and at least one other member of the board of directors of such bank, to be appointed 409 by such board, but no Class "A” director whose bank is m the same city or town as the applying batik or trust company shall be a member of such committee. This committee shall, after receiving the report of such examination as pay be required by the Federal reserve bank m pursuance of directions from the Federal Reserve Board, consider the application and transmit it to the Federal Reserve Board with its report and recommendations. 17. Approval of Application. In passing upon an application the Federal Reserve Board will consider especially (1) The financial condition of the applying bank or trust company and general character of its management. (2) Whether the charter provisions and the nature of tne powers exercised by the said bank or trust company are consistent with the proper conduct of the banking busi ness and with membership m the Federal reserve bank. (3) Whether the laws of the State or district m which the applying bank or trust company is located, contain pro visions likely to interfere with the proper regulation and supervision of member banks. If, m the judgment of the Federal Reserve Board, an applying bank or trust company conforms to all the rcqniro&cn&s of the Federal Reserve Act *nd these regulations, and is other wise qualified for member snip, the Board will issue a certificate of approval. Whenever the Board may deem it necessary it will impose such conditions as will insure compliance v/ith the Act and these regulations. When the certificate of approve 1 and any conditions contained therein have been accepted by the applying bank or trust company, stock m the Federal reserve bank of the district m which the applying bank or trust company is located shall be issued and paid for under the rules and regulations of the Federal Reserve Act provided for national banks which be come stockholders m the Federal reserve banks. V. Powers and Restrictn^g Uvery .state bank or trust company while a member of the Federal Reserve System, (1) Shall retain its full charter and statutory rights as a State bank or trust company, and may continue to exer cise the same functions as before admission except as provided in the Federal Reserve Act and these regulations, including any conditions imposed by the certificate of ap proval. (2) Snail invest in loans on real estate or mortgage only of a character and to an extent which, considering tne nature of its liabilities, will not impair its liquid condition. (3) Shall, if at the time of its admission to membership it has' loans secured by its own stock or loans to one person, firm, or corporation aggregating more than 10 per cent of its capital and surplus or more than 30 per cent of the capital, or if its real estate loan*, m the judgment of the Board, impair its liquid condition, adjust all such loans to conform with the requirements of the Federal Reserve Act and these regulations within such reasonable time as may be determined by the Federal Reserve Board in each case. (4} Shall maintain such improvements and changes m its bank ing practice as nay have been specifically required of It by the Federal Reserve Board as a condition of its admission, and shall not lower the atandard of banking then required Of it, and (5) Shall enjoy all the privileges and observe all those require ments of the Federal Reserve Act and of the regulations of the Federal Reserve Board applicable to State banks and trust companies which have become member banks. VI. Withdrawals. Any State bank or trust company desiring to withdraw from menibership in its Federal Reserve Bank, may do so six months after filing with the Federal Reserve Board written notice of / * its intention to .withdraw. The Board will 'immediately notify the Federal reserve bank of the district m which the withdraw ing bank or trust company is located of the receipt of such no tice At the expiration of said six months, such bank or trust company shall surrender all of its holdings of capital stock m the Federal reserve b-nk, which stock shall be cancelled at once and the withdrawing bank or trust company released from its stock subscription not previously called Such member bank shall cease to be a member of the Federal reserve bank immediately upon the cancellation of its stock and tne Federal reserve bank shall then refuna to sucn bank a sum equal to its cash-paid subscription on the shares surrendered, one-half of one per centum a month from thp period of the last dividend, not to ex ceed the book value thereof, and its reserve deposits7 less , any liability of such member to the Federal reserve bank Pro vided, that if r Federal reserve bank has previously cancelled v/ithin the same calendar jear, ten per centum of its capital stock for the purpose of effecting voluntary withdrawals, it shall not be required to cancel any more stock for such purpose until xhe folioving year, when all applications will be acted upon m the order in whicn they were filed with the Board. Any State bank or trust coupany desiring to withdraw from mem bership and to secure cancellation of its stock at the expira tion of its six months’ notice notwithstanding the fact that its Feaer«.l reserve b-^rk has previously canceled ten per cent of its stock us stated cbove may, at its option, do do. In such case, however, tne Federal reserve bank snail not be re quired to repay tne amount due on its liquiaation account to the withdrawing oant until such tune as, determined by the order of its application, its stock would have been canceled nad it not exerciseo tnis option of withdrawal without immediate pay ment of balances due
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